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Africa needs $40bn/y to meet future power demand-report

It is estimated that at least $40-billion a year is required to meet future demand in the African power sector, compared with current yearly investment of less than one-quarter this amount, New Partnership for Africa’s Development energy programme head Professor Mosad Elmissiry said on Monday.

Speaking at the launch of a policy handbook – ‘Powering Africa Through Feed-in Tariffs’, in Johannesburg, he added that energy demand in many parts of Africa markedly exceeded supply, resulting in loadshedding and the loss of productivity and countless jobs.

“Africa’s population is growing at an alarming rate, increasing the demand for energy and compounding the energy shortage problems. The challenges of securing the investment required to meet the need for increased access to clean energy and the rapidly growing demand, in a sustainable way, are formidable,” Elmissiry indicated.

He pointed out that, despite the abundant renewable-energy resources in Africa, its share of primary energy supply was less than 1%, biomass and hydro excluded. This called for a radical change in the approach followed in the development and use of renewable-energy resources.

However, the main challenge faced by solar and wind technologies was the price gap when compared with well-established fossil fuel generators.

Elmissiry emphasised that measures had to be taken to attract investment in decentralised, as well as centralised renewable-energy production where policy attention had been focused, to date, to mitigate the price risk gap, promote the use of renewables and attend to Africa’s energy needs.

The new study conducted by the World Future Council (WFC) and the Heinrich Böll Foundation with the support of Friends of the Earth England, Wales and Northern Ireland has shown that Renewable Energy Feed-in Tariff (REFiT) policies were a favourable tool to unlock renewable-energy development in Africa.

The report suggested that great opportunity existed for African countries to significantly transform their societies and economies if they improved their use of renewable-energy sources.

The researchers put forward that REFiTs encouraged investment in renewable-energy generation, from individual homeowners and communities to big companies, by guaranteeing to buy and pay for all the electricity that is produced from renewable sources.

The individual case studies examined the factors driving each policy and the socioeconomic effects of REFiTs, as well as presenting and analysing the prerequisites for their effective implementation.

The study revealed that, when tailored to local conditions, REFiT policies successfully increased the overall energy production of areas on and off the electricity grid. Moreover, the decentralised nature of REFiTs provided the opportunity to empower communities and to revitalise local democracy and self-governance by allowing for alternative models of ownership and governance.

“Several African countries have already opened up their electricity market to independent renewable-energy power producers. However, these countries have even more potential for local economic development if their policies are amended, including a more streamlined and transparent administrative process and a lower entry threshold,” WFC Africa office director Ansgar Kiene said.

The report identifies a variety of national and international measures to shift financial resources towards renewable-energy uptake, which included levies on fossil fuels and contributions from the United Nation’s Green Climate Fund.

REFiTs have been successful in increasing the use of renewable technologies worldwide, with 65 countries having implemented some form of a REFiT by 2012, driving 64% of global wind installations and 87% of the photovoltaic capacity that had been installed worldwide.

The report suggests that, while the majority of these installations have occurred in industrialised countries, particularly Europe, the African continent still has significant untapped renewable-energy potential.

“REFiTs are most successful when they are an integral part of a country’s wider development strategy. Thus, high-level political support and strong buy-ins from civil society and the private sector are crucial factors for the successful development and implementation of a REFiT,” Heinrich Böll Foundation Southern Africa sustainable development programme manager Kulthoum Omari stated.

Renewable Energy Ventures CEO Joseph Nganga further noted that findings of the study included that, to build momentum for a REFiT policy, high-level political support, as well as buy-in from all other stakeholders was required.

“The success of a REFiT depends on an enabling environment. The policy should thus be an integral part of the country’s wider development strategy,” he noted.

Numerous recommendations were also derived from the study, as REFiTs may have to be adapted from time to time to keep up with changing circumstances.

In this regard, it was proposed that REFiTs must balance overall policy goals with an incentive for investment, while policymakers should be clear about the objectives they want to achieve with a REFiT.

The study also suggested that it should be taken into account in the design and calculation of tariffs paid to REFiT project developers that many renewable-energy technologies had high initial investment costs, but were cheaper than fossil fuels in the medium to long term.

Elmissiry said this was where special REFiTs could serve as a policy instrument to attract investment in sustainable, renewable electricity production.

A series of policy briefings for stakeholders across all African regions would be held this year.